Illinois lawmakers rush through pension reforms

Ray Long and Michelle Manchir, Tribune Reporters

Future government employees throughout Illinois would have to work longer to get full retirement benefits, and the size of those pensions would be limited under a measure that zoomed through the General Assembly on Wednesday after years of calls for reform.

The idea is to save billions of dollars in the coming decades for taxpayers who will have to dig deep to cover retirement costs for teachers, lawmakers and many public servants throughout state government, universities, cities, counties and park districts.

But the pension cutbacks won't apply to anyone currently in the retirement systems, only to new government hires and state officials elected after the measure takes effect.

And the measure won't do much to whittle down Illinois' worst-in-the-nation pension debt, which is estimated to be $77 billion to $90 billion.

In a rare case of bipartisan agreement, Democratic and Republican lawmakers maintained that the legislation is legitimate reform on pensions, a long-languishing issue in state government.

House Speaker Michael Madigan and Senate President John Cullerton, both Chicago Democrats, sprung the reform legislation Wednesday morning and rushed to get it through the General Assembly before influential government employee and teachers' unions had much time to pressure individual lawmakers to vote against it.

Union leaders argue that new employees should get the same benefits as current employees. Democratic Gov. Pat Quinn will face union pressure to veto the bill, but a spokesman said he plans to sign it soon.

The legislation also would provide some relief to Chicago Public Schools, allowing the system to skip teacher pension payments for three years to give the district financial flexibility while its leaders struggle to fill major budget gaps.

Republican Rep. Randy Ramey of Carol Stream argued that the Chicago provision was unfair when other districts are facing "draconian cuts."

But Madigan insisted that the Chicago school system needed a break on its pension burden, which is largely supported by Chicago property owners while the pensions for teachers outside of Chicago are paid by the state.

One of the biggest cost savings is expected to come from increasing the general retirement age to 67 from 62 or lower in many cases, amounting to more than $40 billion over several decades, said Dan Hankiewicz, pension manager for the legislative forecasting commission.

The measure would also limit the salary level on which pension benefits are based to $106,800, as a way to reduce retirement benefits going to some of the state's highest-paid public employees.

The legislation also would strike at one form of double-dipping by banning public employees from getting a pension from one government while collecting a salary from another.

With voters already angry about high unemployment and a falloff in their 401(k) retirement nest eggs, lawmakers have heard increasing complaints that they needed to get the state's finances in order. The dissatisfaction over government spending has been amplified as Quinn presses for an income tax hike.

Madigan said Quinn made a special request to take action on the legislation this week, hoping that passage would allow Illinois to maintain its credit rating as it seeks to borrow money for a significant state construction program.

The House approved the bill 92-17, with seven lawmakers voting present. The Senate followed suit, approving it 48-6, with three present votes.

R. Eden Martin, president of the Civic Committee of The Commercial Club of Chicago, called the bill a "small step in the right direction, but it doesn't begin to solve the state's urgent fiscal problems."

But the growth in the state's pension debt should be reduced dramatically, said Dan Long, executive director of the Commission on Government Forecasting and Accountability. Long also said the state will save $119 billion over the next 35 years under the legislation.

Though major pension savings won't accumulate for years, Quinn and lawmakers plan to use the pension changes to save money as they craft a budget in the face of a $13 billion shortfall. Because the bill allows officials to recalculate the state's overall pension burden, they estimate saving $300 million to $1 billion in pension payments that would have been required in the next budget.